A debtor often uses their home as collateral to obtain a mortgage, or to obtain a home equity loan. The mortgage monies enable the debtor to purchase the home, or to pay for home improvements, or their children’s college education. If the debtor does not repay the loan(s), then the bank takes back the home by way of a foreclosure case. The bank must have a legal way to make sure that they do not lose money if the debtor does not pay the mortgage.

A bank normally will not file for foreclosure until the debtor misses 6 to 9 months of missed payments. A debtor always has a right to reinstate the mortgage. However, they will have to pay two to three thousand dollars if not more of legal fees to reinstate the loan. Therefore, if at all possible a debtor should never permit the mortgage to go into foreclosure. The debtor will be “hit” with thousands of dollars in late fees, additional interest, and high lawyer fees related to the foreclosure filing.

If you have already received notification from your bank that it is prepared to file a foreclosure action on your property, it is imperative that you act at once to protect your home. A debtor must never ignore telephone calls or letters from their bank that threaten foreclosure.

The debtor must immediately respond. The debtor can either propose a reasonable plan to cure the arrearages current and a promise to make future payments in a timely fashion, or with a bankruptcy petition. You must also bear in mind that once a foreclosure action is filed against you, you have a very limited period of time to assert defenses against these claims and bring your mortgage payments current. If these telephone calls and letters are not taken seriously, the threat of losing your home will quickly become a reality. Mr. Sliwinski, Esq. understands that the inability to make monthly mortgage payments and the fear of losing your home causes sleepless nights is terrifying. If your bank is threatening foreclosure, or has already commenced a foreclosure case, then you must act quickly to protect your home by calling Theodore Sliwinski, Esq. at (732) 257-0708. My law firm will immediately take the appropriate steps to either arrive at a workable solution with your bank, or, if that is not possible, file a bankruptcy petition pursuant to Chapter 13 to stop the foreclosure action against you.

FACING FORECLOSURE: USING BANKRUPTCY TO STOP FORECLOSURE

Chapter 13, also known as the "Wage Earner Bankruptcy," is primarily designed to help financially strapped individuals who are able to repay a portion of their debts over a three-to-five year period of time. Chapter 13 will allow you to repay the mortgage arrears on your mortgage over a three to five year period.

As long as a debtor remains current on their Chapter 13 plan, the bank can not continue their foreclosure case. Once the Chapter 13 is filed, then the foreclosure case that is filed in a New Jersey State Chancery Court, is immediately stopped. If the bankruptcy case is dismissed, then the foreclosure case will be reopened, and started again.

Many of debtors use Chapter 13 to try to save their homes however, they really know in their heart that they will not be able to make the payments. A debtor generally is entitled to file 3 Chapter 13 cases. After three filings, the Bankruptcy Court will generally enter an order granting “prospective relief.” This means that if the debtor files any more petitions, then it will not stop the foreclosure case, or stop the Sheriff Sale.

FACING FORECLOSURE: REFINANCING YOUR MORTGAGE

Even though a person may have fell behind on their mortgage payments, there are many lenders who are willing to provide you with a new mortgage to pay off the existing mortgage. These lenders are called "sub-prime lenders.” These type of loans are called “hard money” loans, or “bail outs.”

These type of loans are also called “B” loans. These types of deals serve individuals with less-than-perfect credit and who are facing a foreclosure. They may be able to work with you. Beware that these lenders will almost always charge a higher rate of interest for these new mortgages than you are currently paying, which will increase your monthly mortgage payments. Still, this is an option that you may wish to pursue.

Our law office has helped many individuals through the process of refinancing their mortgages in order to save their homes. We will work with your new mortgage lender, your existing mortgage bank and your bank’s lawyers during your refinancing process, and will represent you at the closing of your new mortgage loan.

FACING FORECLOSURE: RESTRUCTURE YOUR MORTGAGE

Many banks are willing to work with borrowers to restructure their mortgages, to help them get out of foreclosure and back in good standing with the bank. Remember, your bank is in the business of making loans, not taking homes. Some mortgage banks will allow you to defer your payments for a number of months in the event that you fell behind due to an unforeseeable illness. Other banks may permit you to spread out the past due amount over a period of time in addition to your new mortgage payments. Finally, other banks may have different programs designed to help people out of financial difficulties.

Our law office has helped many individuals through the process of restructuring their mortgages in order to save their homes. We will work with your mortgage bank and your bank’s lawyers to negotiate the restructuring, and will represent your best interests during the entire process.

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